Welfare Reform – the unmitigated and costly legacy of the Tories – They INCREASE the welfare spend!!

Wednesday 11th February 2015 should have seen the release of the final Housing Benefit statistics before the May General Election.

The last figures three months ago revealed in real terms that they have COST the taxpayer money and not saved one penny.

Yet is this the coincidence or reason why the DWP has NOT released the latest figures – the last figures before the general election?

Despite all the cuts and caps we are paying MORE for these policies than we did before despite the pain they cause and despite the rhetoric from IDS these policies DO NOT WORK.  I published a blog on the last figures to show that in real terms the Housing Benefit bill has INCREASED not decreased as you would naturally expect with all of the cuts and caps of the misnamed welfare ‘reforms’ – To reform means to improve not to make things worse!

The bedroom tax, the overall benefit cap or OBC, the local housing allowance (LHA) cap and the shared accommodation rate (SAR) cap to those under 35 from under 25 are the four central coalition welfare reform policies aimed at reducing the overall housing benefit bill. The bedroom tax cuts HB at source.  The OBC cuts HB at source, the LHA cap reduces the HB that can be claimed and the SAR cap means those under 35 get a reduced rate of HB.

All of these 4 policies were aimed at achieving the coalition stated aim from June 2010, released in its own HB Direct magazine, a month after they took office, to reduce the HB bill by £2 billion per year by 2015, or by today.

The Chancellor announced a package of Housing Benefit (HB) reforms in his Budget statement on 22 June. It is the most significant and comprehensive reform programme for HB since the scheme was introduced ….Ministers are clear that the overall cost of HB, forecast to be around £20 billion this financial year, must be controlled and reduced. The package of reforms will save nearly £2 billion by 2014/2015. There are also important policy considerations around fairness and work incentives that lie behind the reforms”

The overall HB bill inherited was £20.87 billion per year at May 2010 and inflating that figure by each Septembers CPI figure, the figure used for benefits, of 2.6%, 5.7%, 1.4%, and 2.1% and from 2010/11 to 2014/15 the figure inherited would be £23.43 billion per year in real terms as at today and means the HB target set by the coalition was £21.48 billion as at today when the four named policies above were brought into operation to achieve that £2bn per year saving.

The latest actual figure of 3 months ago is £23.94 billion per year and reveals that the four major welfare reform policies of the bedroom tax, OBC, LHA and SAR caps have NOT saved that £2 billion per year.

So in fact and in real terms, the overall HB bill has increased by £550 million with these reform policies they have not saved a penny and cost the taxpayer MORE.

How can the overall HB bill increase when the cuts and caps are at source?

That is the obvious question as, surely, cuts and caps must see the bill falling?

Yet this is not the case as these ‘reforms’ (sic) are the political equivalent of all fur coat and no knickers, highly superficial political myth that cause other and other higher costs to the Housing Benefit bill. For example we know that at May 2010 the amount of HB paid to those in work was £2.8 billion per year and allowing for inflation would be £2.93 billion today.  Yet it was £5.4 billion in the latest figure and has almost doubled in this parliament.

We suspect, but cannot prove either way, that the bedroom tax may have seen social tenants downsize to more expensive private sector accommodation that sees a 2 bed private property pay out far more in housing benefit than a 3 bed or even a 4 bed social housing property.

We also know that homelessness has increased significantly and caused by evictions in the private sector due to LHA and SAR and OBC and caused evictions in social housing through the bedroom tax and OBC.  That leads to hugely increased HB cost of temporary homeless accommodation and on that point BBC London did a TV article revealing that LB Westminster were paying out almost £13,000 PER MONTH, the equivalent of £150,000+ per year in temporary homeless HB cost.

Many will recall the outrage of IDS saying the welfare ‘reforms’ (sic) were needed to prevent people receiving £100k per year in HB.  Subsequently figures showed this was 5 households nationally yet the LB Westminster alone were paying out more than £100k per year to more households than that alone and  BECAUSE of the welfare reform policy of the LHA cap!

The simple and obvious point is that these four major welfare reform policies of the coalition have increased the amount paid out in Housing Benefit. And the policies do not work.  The figures prove that beyond any question.  The actual real term cost has INCREASED.

And this is going to get worse too!

The coalition are proposing to reduce the OBC down to £440 per week from the current cap figure of £500 per week and that, as I explained here, will see the overall HB bill rocket not just increase and means even the cheapest council landlord rents will be unaffordable to those household not in work – the unemployed and those who are sick and disabled – and to those it forces to take up low paid work which sees no income tax being paid and these households still qualify for full housing benefit.  There is no reduction only an increase in homelessness costs to the HB bill from this stupid ill-conceived and overtly political policy that simply does not work. But hey as long as the public equate a cap or cut with a reduction in cost the coalition will get away with their political spin on all policies of alleged reform despite costing much more.

Many other indefinable costs flow from these cuts and caps.  The increased cost to the NHS of the anxiety and depression they cause.  The increased costs to the criminal justice system of the welfare reform phenomenon of a huge increase in the shoplifting of foodstuffs that has emerged and the increased costs of domestic violence and abuse that can be linked with these so-called ‘reforms’ and there are many more intangible but additional costs to the public purse of these ill-conceived and ineffective policies.

Yet there we run into the contentious arguments of causal effect and there is no need to as the 4 major welfare reform policies do NOT save a penny and actually COST MORE.

There is no need to go down this blind alley and allow the attention to be taken away from the fact that collectively the HB reforms of the bedroom tax, benefit cap, LHA cap and SAR cap do not save a penny and cost more – £550 million more per year and therefore £2.5 billion per year more than this coalition said.

Is the DWP hoping the fact they have NOT published the figures the story and so take away attention from the fact – and it is an indisputable fact – that the welfare reform policies of the bedroom tax, the benefit cap, the LHA cap and the SAR cap have all, collectively, FAILED to cut the HB welfare spend?

While the opposition and notably the Labour Party with the incompetent Rachel Reeves stupidly get into arguments of how they will pay for the removal of the bedroom tax policy, which is a non issue given the fact the bedroom tax  COSTS more money and just abandoning it forthwith would save the public purse, this set of ill-conceived and costly policies cost you the taxpayer more every day.  They do not save a penny at all as IDS and his DWP claim they cost MORE.

Yes it may be difficult for Her majesty’s Official Opposition to convince the general public that the cuts and caps from the bedroom tax, benefit cap, LHA and SAR caps actually cost more, but the fact is they do.  Joe Public may not be able to grasp how cuts and caps increase the overall bill as it sounds too illogical.

Yet the Labour Party are going to have a far bigger job convincing the general public that Universal Credit – and lets remember the vast majority of that is still to come – will cost far more and be an unmitigated disaster for the taxpayer.  UC’s failings will be far more than writing off the odd half a BILLION or so in IT costs as it doesnt even work in theory as it assumes the 100% take up of all welfare benefits and the DWPs own figures reveal that nearly £20 BILLION per year goes unclaimed in Housing Benefit, tax credits and Pensions Credit alone – in simple terms UC’s one stop shop mechanism of get ALL you are entitled to and not a penny more or a penny less will add at least £20 BILLION per year to the benefit bill.

It is time for Labour to cut their teeth by saying they will get rid of the bedroom tax and benefit cap and LHA  and SAR caps as they cost the country and the taxpayer more.  Then they may be able to explain just how UC, the flagship policy of the truly incompetent IDS, can never work and that the entire welfare reform (sic) policies of the tyrannical IDS are not even back of a fag packet, they are much much worse that that.









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